U.S. Venture Capital Energy-Technology Investment Hit $520 Million In 2004

By Consulting Specifying Engineer Staff June 6, 2005

U.S. venture capital investment for energy technology startup companies reached $520 million during 2004, a slight increase from the $509 million raised during 2003, according to energy venture capital firm Nth Power LLC’s annual study. The 2004 number represents 2.6% of the total of $20.4 billion in venture capital investments made in the U.S. last year.

The $520 million came in the form of 69 transactions at an average of $7.5 million per investment, up from $6.4 million per investment in 2003.

“We saw more patience and selectivity from investors in 2004,” said Tim Woodward, managing director of Nth Power. “More later-stage deals received funding and investors took time with their diligence. But the selectivity turned into more investment confidence as the average deal size grew by more than $1 million.”

Breaking things down by category, “related services” showed the most improvement between 2003 and 2004, growing by 82% to $58.3 million. “Distributed energy” rose 34% to $210.5 million and “power reliability” climbed 3% to $82.5 million, while “energy intelligence” fell 37% to $139.9 million. “Other related technology” deals, which include advanced materials geared toward energy applications, grew 48% to $29 million.

California led the way in energy technology investments again, as companies based there attracted almost $200 in investments, roughly 40% of total investments. Companies in Colorado, Massachusetts, Michigan, New Hampshire and Washington also raised significant amounts of capital.

Nth Power released its data as part of Clean Energy Trends 2005 , an annual report from clean technology consultant Clean Edge. The full report is available for free at cleanedge.com .